Ofgem has also proposed setting minimum supply obligations on energy companies to make sure the lights don't go out, in moves reminiscent of the new capital requirements that have been placed on banks to stop them going bust following the financial crisis.

Energy experts said that the regulator's proposals represented an "extraordinary volte-face". Ofgem has been one of the biggest advocates of a liberalised energy market, arguing that companies could be left to build enough new power stations and low-carbon forms of generation to guarantee energy supplies and reduce carbon emissions.

But only a fraction of the estimated £200bn investment needed by 2020 has been made, because volatile energy prices, and the short-term supply contracts that have characterised liberalisation, have made spending such huge sums too risky.

Now Ofgem is recommending that energy companies receive guaranteed rates of return on the new plants they build. It also wants to increase the financial penalties that gas suppliers incur if they cut off customers.

Alistair Buchanan, Ofgem's chief executive, conceded to the Guardian: "We live in a different energy world." It is understood he has revised his view on the market's ability to deliver the investment required, following the financial crisis.

Ofgem also added to growing calls for a carbon tax, which would make building new reactors economic, for example. The government, which last month indicated it was open to the idea, will provide more detail on a carbon tax and other energy reforms in next month's budget.

Professor Dieter Helm, an expert in the economics of energy at the University of Oxford, said: "It's an extraordinary volte-face to admit that a liberalised market won't achieve its objectives. They have argued against intervention and said markets would engage with the issue of security of supply. The irony is incredible."

Ofgem warned that the UK could start to see a shortage of power plants and gas supplies by 2015 unless the way energy companies operate is overhauled. Huge investment is needed to replace old coal and nuclear plants that will be closing soon, and to meet a target of generating a third of the country's electricity from renewables by 2020. North Sea gas reserves are also dwindling, making the UK more dependent on unreliable imports.

"For the next two to three years with gas supplies and power station availability, we are in a plentiful position," Buchanan said. "The problem is the speed at which it deteriorates. To wait a few more years [without doing anything] could cause us trouble. We would get down to historically low levels of margins of plant, to when you are starting to ask if you have enough power stations."

Buchanan said there was a "two-year" window in which to act, otherwise consumer bills would have to rise steeply to pay for the last-minute investment needed to maintain energy supplies. "Crisis tactics will be paid for by the consumer," he warned.

The regulator's most radical proposal was to set up a central energy buyer, on similar lines to the old Central Electricity Generating Board, which was abolished after privatisation. At present, the "Big Six" energy companies – Centrica, E.ON, npower, Scottish and Southern, Scottish Power and EDF – own most of the UK's power plants, which they use to supply most of the country's consumers.

Critics have argued that the current system is not transparent and guarantees the companies excessive profits. A central government-controlled body would smash this dominance, by requiring power plants to sell it electricity at fixed rates, which it would sell on to customers.

The Big Six are resisting such radical changes, though they want more regulation and certainty over future energy prices in order, they say, to make building new power plants viable. One of the companies accused Ofgem of trying to curry favour with the Conservatives, who have indicated they may abolish or slim down the regulator if they win the election.

One source said: "Ofgem wants to be seen to be carrying a big stick for Mr Cameron and Mr Clarke. There is no doubt about that. We all know they are stating the bleeding obvious, and it's also a little bit of scare-mongering. We all know that the market needs to be fixed."

Ofgem is also at odds with the government over its estimates of how much consumer bills will have to rise to pay for the investment needed. The department of energy and climate change, run by Ed Miliband, has estimated that bills will only have to rise by 8% by 2020. Ofgem forecasts the rise will be at least 20%, which energy analysts believe is much more realistic.